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Allied Interstate LLC v. Kimmel & Silverman P.C

United States District Court, Second Circuit

August 12, 2013

ALLIED INTERSTATE LLC, Plaintiff,
v.
KIMMEL & SILVERMAN P.C. et al., Defendants.

MEMORANDUM OPINION AND ORDER

LAURA TAYLOR SWAIN, District Judge.

Plaintiff Allied Interstate LLC ("Allied" or "Plaintiff") brings this action against Kimmel & Silverman P.C. ("K&S"), a Pennsylvania based law firm, and Craig Thor Kimmel, who is the "Kimmel" of K&S (collectively, "Defendants"), for trademark infringement and related claims under the Lanham Act, 15 U.S.C. § 1051 et seq., and New York state law. Plaintiff seeks to enjoin Defendants from using Plaintiff's "ALLIED INTERSTATE™" trademark and any "confusingly similar" terms in commerce and requests compensatory damages, punitive damages, costs and attorneys' fees. The five-count Complaint asserts two claims of trademark dilution, brought under 15 U.S.C. § 1125(c) and N.Y. Gen. Bus. L. § 360-l respectively (Counts One and Five); one claim of unfair competition under 15 U.S.C. § 1125(a) (Count Two); one claim of false designation of origin under 15 U.S.C. § 1125(a) (Count Three); and one claim of trademark infringement under New York common law (Count Four). Defendants have moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). This Court has jurisdiction of this action pursuant to 28 U.S.C. §§ 1331, 1332 and 1367. After careful consideration of the parties' submissions and arguments, and for the following reasons, the Court grants Defendants' motion for judgment on the pleadings in its entirety.

BACKGROUND

The following facts are derived from the allegations in the Complaint and are assumed to be true for the purposes of the instant motion. Plaintiff Allied Interstate provides "accounts receivable, customer retention and debt collection services" to its clients. (Compl. ¶ 10.) As such, Plaintiff's work is governed by the Fair Debt Collection Practices Act (FDCPA), a federal statute that seeks to eliminate abusive debt collection practices. 15 U.S.C. § 1692 et seq. Defendants administer a website, found at the URL www.creditlaw.com, that is intended to solicit new clients for Defendants, advertising Defendants' services and generating leads for potential FDCPA claims against Plaintiff. (Compl. ¶¶ 25-27.) Plaintiff alleges that "Defendants have embarked upon an Internet advertising campaign" that makes unlawful use of the ALLIED INTERSTATE™ mark as part of an "overall strategy to create a cottage industry of often frivolous FDCPA lawsuits against Allied." (Compl. ¶ 24.)

Upon accessing Defendants' website, the viewer encounters a header reading: "When debt collectors called you, they never expected you to call us!" (Compl., Ex. A.) Below this header are the words: "Stop Debt Collector Harassment! The law protects you from unfair and deceptive debt collection practices." (Compl. ¶ 28, Ex. A.) Slightly further down the page, users are invited to complete an online form for a "FREE Case Review." (Compl. ¶ 29.) The online form allows users to select "Allied Interstate, " among other options, in response to the question "Who Have You Heard From?" (Id.) Additionally, a column on the left side of every page of Defendants' website includes a link to "Stop Allied Interstate Debt Harassment, " which redirects the user to a page describing Allied's purported misconduct. (Compl. ¶ 31.)

In addition to the explicit mention of Allied on Defendants' website, the Complaint alleges that Defendants make use of Allied's trademark in two other ways. First, the Complaint alleges that Defendants have incorporated the mark into the "metatags, keywords and/or hidden words" of www.creditlaw.com. (Compl ¶ 32.) "Metatags" are the words and phrases within a website's HTML code used to identify the site's content. (Compl. ¶ 33; see also Ex. C.) "Hidden words" are text on a webpage that is typically invisible to a human viewer - for example, because the text is the same color as the page's background - but which can nonetheless be detected by search engines' indexing tools. (Compl. ¶ 35.) By incorporating "Allied Interstate" into www.creditlaw.com through these methods, Plaintiff contends, Defendants increased the likelihood that search engines would direct Internet users to Defendants' website in response to searches of Plaintiff's name. (Compl. ¶ 39.)

The Complaint further alleges that Defendants purchased the term "Allied Interstate" as a keyword through Google's AdWords program. (Compl. ¶ 37.) Keywords are descriptive terms and phrases submitted by website owners to search engines that are used to describe and index their websites. (Compl. ¶ 34.) Search engines may charge a fee for prominently displaying a link in response to searches for specified keywords. (Id.) Plaintiff avers that Defendants have purchased "Allied Interstate" as a keyword from Google, which Plaintiff claims is evidenced by the fact that a link to Defendants' website is displayed as a "sponsored link" at the top of the list of results when an Internet user conducts a Google search for "Allied Interstate." (Compl. ¶ 37.) Exhibit D to Plaintiff's Complaint displays a list of results for a Google search of "allied interstate." (Compl., Ex. D.) Underneath the words "Ads related to allied interstate" is a link titled "Stop Collection Calls - Is Allied Interstate Calling You?" (Id.) Below the link are two lines of text, the first listing Defendants' URL, www.creditlaw.com, and the second bearing the slogan "Stop the calls for free!" (Id).

DISCUSSION

A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is decided under the same legal standard as a motion to dismiss a complaint under Rule 12(b)(6) when the movant contends that the Complaint fails to state a claim upon which relief can be granted. Ziemba v. Wezner , 366 F.3d 161, 163 (2d Cir. 2004). When deciding a Rule 12(b)(6) motion, the Court accepts as true the non-conclusory factual allegations in the complaint and draws all reasonable inferences in the plaintiff's favor. Roth v. Jennings , 489 F.3d 499, 501 (2d Cir. 2007); see also Ashcroft v. Iqbal , 556 U.S. 662 (2009). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. at 663 (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678.

As a preliminary matter, Defendant contends that Plaintiff's federal trademark infringement claims must be dismissed because Defendant's use of Plaintiff's mark in metatags, hidden words and keywords does not constitute "use in commerce" under the Lanham Act. 15 U.S.C. § 1127 provides that a mark "shall be deemed to be in use in commerce" "when it is used or displayed in the sale or advertising of services." 15 U.S.C.S. § 1127 (LexisNexis 2006). The metatags and hidden words, however, bring users to the Defendants' website, which promotes Defendants' services, "effectively act[ing] as a conduit, steering potential customers." Bihari v. Gross , 119 F.Supp.2d 309, 318 (S.D.N.Y. 2000) (considering the likelihood of confusion under the Lanham Act from defendant's use of plaintiff's mark in metatags). Indeed, the Second Circuit has held that "Google's utilization of [third party trade] mark[s] [by selling them to other advertisers through Google's AdWords program as keyword search terms] fits literally within the terms specified by 15 U.S.C. § 1127." Rescuecom Corp. v. Google Inc. , 562 F.3d 123, 129 (2d Cir. 2009). Although Defendants attempt to draw a distinction between Google's sale of Plaintiff's mark and their own purchase thereof, it is clear "that defendants' use of the mark to purchase AdWords to advertise its products for sale on the Internet constitutes use in commerce.'" CJ Products LLC v. Snuggly Plushez LLC , 809 F.Supp.2d 127, 158 (E.D.N.Y. 2011) (citing Rescuecom , 562 F.3d at 127). Plaintiff has thus sufficiently alleged that Defendant is using Plaintiff's trademark in commerce. The Court, accordingly, considers the sufficiency of all of Plaintiff's infringement and dilution claims under the Lanham Act and corresponding state law.

Plaintiff's Dilution Claims (Counts One and Five)

Plaintiff's Claim for Dilution Under the Lanham Act, 15 U.S.C. § 1125(c)

Under the Lanham Act, the owner of a "famous mark" is "entitled to an injunction against another person who, at any time after the owner's mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment." 15 U.S.C.S. § 1125(c)(1)(LexisNexis Supp. 2013); see also Starbucks Corp. v. Wolfe's Borough Coffee, Inc. , 588 F.3d 97, 105 (2d Cir. 2009). Plaintiff alleges that Defendants have diluted its mark by tarnishment, which federal law defines as an "association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark." 15 U.S.C.S. § 1125(c)(2)(C)(LexisNexis Supp. 2013) "A trademark may be tarnished when it is linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context, with the result that the public will associate the lack of quality or lack of prestige in the defendant's goods with the plaintiff's unrelated goods." Starbucks , 588 F.3d at 110 (quoting Hormel Foods Corp. v. Jim Henson Productions, Inc. , 73 F.3d 497, 507 (2d Cir. 1996)).

The Second Circuit does not recognize an action for dilution where the defendant uses a plaintiff's mark not to denote the defendant's goods or services, but rather to identify goods or services as those of the plaintiff. See Tiffany (NJ) Inc. v. eBay Inc. , 600 F.3d 93, 111-12 (2d Cir. 2010) ("[t]he district court rejected Tiffany's dilution by blurring claim on the ground that eBay never used the TIFFANY Marks in an effort to create an association with its own product, but instead, used the marks directly to advertise and identify the availability of authentic Tiffany merchandise on the eBay website.... We agree. There is no second mark or product at issue here to blur with or to tarnish Tiffany") (internal quotation marks and citation ...


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